Due to the recent surge in the stock market, India has emerged in the eyes of investors as a strong market in the world, which can perform well in terms of investment in the long term. Nifty50 has reached record highs with a gain of 18.7% so far this year. The iShares MSCI India ETF (INDA), which tracks the Indian market, is also up about 19% in 2024. This is the biggest annual gain of the fund since the 34.5% surge in 2017. It is also performing better than the 16% gain of the iShares MSCI Emerging Market ETF (EEM).

There are many reasons for the boom in the Indian market. These include factors such as an increasingly tech-savvy banking system, investment in infrastructure and diversification of supply chains outside China. Apart from this, consumer spending and real estate investment are also increasing in India. Experts say that India has the best structural framework among emerging markets. India is currently the market with the best potential in the world.

Impact of Fed's decisions
The Indian market has become even more attractive due to the low interest rates of the US Federal Reserve. By the end of this year, the US central bank may once again cut interest rates. In the six months after the Fed's interest rate cut, the MSCI India Index has gained more than 27% on average and is the market that has outperformed other major benchmark indices in the world. The Indian market performs better than the S&P 500, Nasdaq and Russell 2000. It is a better performing market than emerging markets around the world.

India beats China
India remains one of the world's fastest growing major economies and has overtaken China to become the largest emerging market. This year, India has been successful in overtaking China in the MSCI index on the basis of weightage. Investors are liking the situation in India more than in China, because here they are seeing a greater increase in earnings. CNBC has said in a report quoting experts that earnings can show growth of up to 6-8% annually in the next 5 years. Investors

also see India as a safe place for investment due to its friendly relations with the major countries of the world and being the largest democracy in the world. Both these things also play an important role in attracting foreign investment in India and keeping it safe from the risk of global trade war. India has also performed better than the world's emerging markets in recent years. In the last five years, the INDA fund has grown by 77.2%, while the EEM has grown only by 16%. Talking about 2015, INDA has given more annual profit than the emerging market fund and has seen less decline.

Experts believe that investors need to focus more on India. With its young population and people moving from lower to middle class, India is becoming a strong demand market for the global market. In such a situation, there are good possibilities of growth in India.

What are the risk factors for the Indian market?
Like the markets around the world, the Indian market is also not risk free for investors. If the Fed cuts interest rates less than expected, then this move of America can create a bad situation for the Indian stock market. According to the Fedwatch tool of CME Group, traders expect another cut in interest rates before the end of the year. Fed Chairman Jerome Powell has also said that the Fed can make a small cut in rates.

Apart from this, India is also facing the crisis of income inequality. Barclays analyst Venugopal Gare said that India's middle class is in a new phase of growth, about 50% of India's national income is captured by the top 10% of the country's population.

In a note written in early September, he said, "The risk is that employment opportunities are not being created as expected and India's economic growth often gets derailed due to the country's political environment and geopolitical events."

What strategy should be adopted in the Indian market
? The financial sector is the most prominent among the investors' favorite sectors in India's fast-growing market. Krishna Mohanraj, portfolio manager of Diamond Hill Capital Management, has described the country's banking sector as very attractive.

Mohanraj told CNBC, "India's financial sector is witnessing three good things together, including GDP growth, strong banking system and the size of private banks growing faster than public sector banks. If you put these three things together, it seems to be a great situation. Banking valuations are more reasonable than industrial or consumer valuations. So here you get good profits."

Both GlobalX's Dorson and Mohanraj included HDFC Bank, ICICI Bank and Axis Bank in their top picks in India's financial sector. US investors can buy ADRs for ICICI and HDFC. However, Axis Bank is only available over the counter.

Dorson said that the valuation of India's financial sector has been reduced. He said that these three banks are "high quality names" which have invested a lot in the last few years to improve themselves technologically. Due to this, the growth in online banking business of these banks can prove to be very helpful for them.

Dorson and Mohanraj also like many stocks related to India's infrastructure sector. However, they feel that some sectors of the industrial sector are currently overvalued. Mohanraj said, "India is investing strongly in infrastructure and I do not see any signs of it slowing down."

India's economic growth and infrastructure development have also made the real estate sector here an attractive place for foreign investors. Along with the rapidly increasing demand for working space, the real estate sector is also being strengthened by the increase in people's disposable income and the desire to buy a bigger house.

In the field of real estate, Dorson likes the projects of Prestige Estates. Along with White Haven Coal, this stock is available to American investors through over-the-counter shares.